Legal charge on a property

[headlad]

My mother owns 1/3 of her flat since 1989.
The other 2/3s were owned by the building company who renovated the flats and had a legal charge put on the property to recover the debt should my mother want to sell or die or move out.
The building company went bust and is the hands of a receiver.
My mother has lived there all this time and has no intention of selling or moving.
The receiver wants to retire and wind up the receivership of the company.
I and my family have been offered to purchase the legal charge.
If I buy the legal charge am I buying the other 2/3s of the property or just the debt?
Can someone please help or advise?

[FionaC]

Re: Legal charge on a property

Hi headlad,

If you want to transfer any ownership of property it has to be done formally with a deed and these days the land registry has a form for every type of transaction.

It is worth being a bit careful in this situation because the legal charge will need to be removed at the time payment is made. Usually the beneficiary of the legal charge doesn't own the house just a right to enforce a sale and whatever monies are due to be paid, a bit like a mortgage. If you pay off the legal charge you could simply pay off the debt and the outcome would simply be that the property owned by your mother would be debt free.

If you want to pay off the debt and share the ownership with your mother I would suggest you speak to a conveyancer. Don't forget to negotiation and Good Luck!

[headlad]

Re: Legal charge on a property

Hi headlad,

If you want to transfer any ownership of property it has to be done formally with a deed and these days the land registry has a form for every type of transaction.

It is worth being a bit careful in this situation because the legal charge will need to be removed at the time payment is made. Usually the beneficiary of the legal charge doesn't own the house just a right to enforce a sale and whatever monies are due to be paid, a bit like a mortgage. If you pay off the legal charge you could simply pay off the debt and the outcome would simply be that the property owned by your mother would be debt free.

If you want to pay off the debt and share the ownership with your mother I would suggest you speak to a conveyancer. Don't forget to negotiation and Good Luck!

FionaC thank you for your reply.
If I buy the charge can I keep it existing in my name and would the conditions of the charge carry over to me as no interest has been paid since it was put in place in 1989? I am being offered the charge less the interest.

If the charge continues and the property has a enforced sale, say from a local authority for care home fees, does the charge receive any payments including interest first from the sale?

Sorry if it sounds complicated, I need to make sure I am making the right decision before accepting the charge.

[Openlaw15]

Re: Legal charge on a property

My mother owns 1/3 of her flat since 1989.
The other 2/3s were owned by the building company who renovated the flats and had a legal charge put on the property to recover the debt should my mother want to sell or die or move out.
The building company went bust and is the hands of a receiver.
My mother has lived there all this time and has no intention of selling or moving.
The receiver wants to retire and wind up the receivership of the company.
I and my family have been offered to purchase the legal charge.
If I buy the legal charge am I buying the other 2/3s of the property or just the debt?
Can someone please help or advise?

You're simply buying the debt even the solicitor below , albeit very basically, reinforced what I also said to you on the other thread. There is no way on God's green earth that the receiver would sell you this charge - for the cost of renovation of the flat - as though it were the value of 2/3s of the property. The receiver has its alternative remedies it could mortgage the other 2/3s, force a sale as majority owner, or the creditors would sue the receiver for offering transactions at an under-value. So, my view is if you purchase this charge you secure/ acquire the value of the charge, ie purchasing the debt's value. Look at as though you were the receiver, would you sell a company's 2/3s interest in a property whose interest you acquired on its liquidation just for the value of its charge? I am guessing no is the answer. It would simply be commercial negligence with the duty of care breached albeit at the professional standard, that is when compared with an (hypothetical) equivalent person as though he were in the receiver's position (professional standard).

[Openlaw15]

Re: Legal charge on a property

FionaC thank you for your reply.
If I buy the charge can I keep it existing in my name and would the conditions of the charge carry over to me as no interest has been paid since it was put in place in 1989? I am being offered the charge less the interest.

If the charge continues and the property has a enforced sale, say from a local authority for care home fees, does the charge receive any payments including interest first from the sale?

Sorry if it sounds complicated, I need to make sure I am making the right decision before accepting the charge.

You can only purchase the charge as an equitable interest to security on the land, ie cannot be through a deed (title/ legal interest). A charge is not ownership of land as it is only security against the debt. The receiver cannot give you it by deed as that then would then be title in or to land whereas a charge is merely an equitable interest as security for a debt. Only a secure creditor, ie a bank etc has the right to use legal charges (ie charge by deed). All interests including security, ie a non proprietary charge affecting registered property must be on the relevant property's land register since 2003.

It seems to me you need to get a charge order from court and then have it registered. You cannot simply transfer an equitable interest into your name. Although technically your mother could challenge it (the charge order) as it is an interest affecting her ownership to land, she is unlikely to obviously. You will still have to pay the court fees for the charge.